Colorado Real Estate Journal - August 19, 2015
Not long ago, apartment investors had little interest in the Glendale area market. But not Morgan Reynolds and Steve Daniel, principals of Denver-based Blueline Properties. In 2011, they started buying older apartment buildings in Glendale and in Denver, across the street from Glendale. “When we started investing, there was no competition,” Daniel said. “Carmel was a big owner at the time, but really we were the first people to come into that market.” Their bet, instincts and projections that they could transform tired buildings and make them hip, lower-cost options to trendier urban Denver neighborhoods paid off. They recently sold five apartment communities for a total of $69.5 million to Arel Capital, based in New York City. That works out to an average of $129,423 per square foot. Records indicated they paid $33.46 million for the five apartment communities. One of the buildings that they bought, refurbished and sold was the Birch, a 129-unit building built in 1965 at 4390 E. Mississippi Ave. It is believed to be the first apartment building built by the late and legendary Kal Zeff, the founder of Carmel Properties, which he built into the largest-ever locally owned apartment empire in the Denver area. “That’s the story,” said Terrance Hunt, who listed, marketed and sold the portfolio with fellow ARA Newmark teammates Jeff Hawks, Doug Andrews and Shane Ozment. Zeff had his office in that building for many years, Hunt said. Blueline bought the Birch in November 2011, as part of the Carmel portfolio sale, he said. Blueline purchased the Birch for $6.2 million and sold it for $14 million, according to public records. That equates to $198,527 per door and $135.39 per sf. The other buildings in the portfolio sold are: • Four Mile Flats, a 115-unit, four-story building that sold for $17.5 million, or $152,174 per unit and $171.82 per sf. Blueline purchased it in April 2014 for $8.7 million, according to records. • Infinity Flats, a 117-unit building at 1045 S. Birch St. built in 1979 at 1250 S. Clermont St. They sold it for $17.2 million, or $147,009 per unit and $168.88 per sf. They purchased it in May 2011 for $6.35 million, records indicate. • Vantage Point, a 115-unit, three-story apartment building built in 1965 at 1105 S. Cherry St. They sold it for $13.9 million, or $113,115 per door and $131.76 per sf. They paid $8.63 million for it in 2013, according to records. • Park Point, a 61-unit, three-story building built in 1965 at 1045 S. Birch St. They purchased it for about $3.6 million in July 2013, according to records. Hunt, who has known Reynolds since he graduated from college in the early 1990s, said he and Daniel saw potential for the area before anyone else. “It has great access between the Denver Tech Center and downtown,” Hunt said. “You have close proximity to light rail and you have all of the retail along Colorado Boulevard as well as in the Cherry Creek Shopping Center and Cherry Creek North,” Hunt said. There also is a tremendous amount of new restaurants and developments in Glendale itself, he said. Indeed, there is a $175 million retail renaissance plan called Glendale 180, which was unveiled in April. “The Glendale area is not as congested as Capitol Hill, where parking is just about impossible,” Hunt said. “Parking is easy in Glendale and the units are bigger and less expensive,” Hunt said. Reynolds and Daniel also cited all of the reasons that Hunt ticked off. Hunt said that the two not only had great instincts, but also worked hard to make their investments pay off. “These are the kind of guys you love to see succeed,” Hunt said. “They are very hands-on investors,” Hunt said. “Steve was actually out there swinging a hammer.” Hunt said there were about 10 “very strong” offers for the portfolio. Reynolds and Daniel also said their equity investors were extremely pleased with their investments. “The winning bid came in with a very aggressive price and the ability to pay cash,” Hunt said. Earlier in the year, Arel Capital had purchased an 80-unit building in Washington Park, which was a 1031 exchange in which the seller purchased the Wynkoop Brewing Co. building downtown and the Ale House at Amato in Lower Highland. Hunt said the success of Blueline and a handful of others hasn’t gone unnoticed by other investors. “Now, on just about every block in Glendale there is a building that is being rehabbed and repositioned,” Hunt said